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INTACT FINANCIAL CORP. $69.42 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $9.2 billion; Dividend yield: 2.8%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.

In the three months ended December 31, 2013, Intact’s revenue rose slightly, to $1.70 billion from $1.69 billion a year earlier. The company earned $143 million, or $1.05 a share, down sharply from $194 million, or $1.42.

However, the latest results include a pre-tax loss of $55 million related to December ice storms in Ontario and Quebec.

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BELLATRIX EXPLORATION $9.96 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 171.0 million; Market cap: $1.7 billion; No dividends paid) has announced an expanded joint venture agreement with Grafton Energy Co. I Ltd. The deal should speed up the development of Bellatrix’s Cardium shale oil deposits in west-central Alberta.

Under the new deal, Grafton increased the amount it is paying Bellatrix to $250 million from $200 million.

In return, Grafton gets 54% of the production from a three-year, $244-million drilling program. It will get this share of the wells’ output until it earns back its $250 million, plus an 8% return on its original investment. It will then hold a 33% interest in each well.

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CIMAREX ENERGY $118.11 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 87.0 million; Market cap: $10.0 billion; Dividend yield: 0.5%) produces and explores for oil and gas. Gas makes up 50% of its output.

Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas (49% of production); the Permian Basin of western Texas and southeastern New Mexico (47%); and the Texas Gulf Coast (4%).

In the three months ended December 31, 2013, Cimarex’s production averaged 704.9 million cubic feet of natural gas equivalent per day (including oil). That’s up 4.2% from 676.7 million cubic feet a year earlier.

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DEVON ENERGY CORP. $68.68 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235-3611; www.dvn.com; Shares outstanding: 407.4 million; Market cap: $27.6 billion; Dividend yield: 1.4%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 57% gas and 43% oil.

In 2011, Devon sold all of its international and Gulf of Mexico properties, which it saw as risky and expensive to develop. The company aimed to focus on its North American projects, which include conventional production, Texas shale oil and Alberta oil sands.

Devon recently narrowed its focus even further by selling some of its Canadian properties to Canadian Natural Resources (symbol CNQ on Toronto) for $2.8 billion.

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AIMIA INC. $17.56 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 173.0 million; Market cap: $3.0 billion; Dividend yield: 3.9%) owns and operates Aeroplan, Canada’s largest loyalty program, with over 4.6 million members who collect Aeroplan miles from participating companies. Members can exchange miles for flights, car rentals, hotel rooms and merchandise.

Aimia also owns Nectar, the U.K.’s biggest loyalty program. In addition, it has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico.

In the three months ended December 31, 2013, Aimia’s revenue rose 1.4%, to $687.6 million from $678.2 million a year earlier. Excluding one-time items, earnings per share fell 5.8%, to $0.49 from $0.52. The earnings decline was due to an increase in the company’s cost per mile, mostly because its expenses rose as it expanded its operations.

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DIEBOLD INC. (New York symbol DBD; www.diebold.com) is a leading maker of automated teller machines (ATMs). It also makes safes, vaults and building-security systems. The company gets 52% of its revenue from overseas....

MOLSON COORS CANADA INC. $64 (www.molsoncoors.com) reported that its earnings rose 2.3% in 2013, to $727.1 million from $710.5 million in 2012 (all amounts expect share price in U.S. dollars). Due to more shares outstanding, earnings per share gained 1.0%, to $3.95 from $3.91....

TIM HORTONS INC. $62 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 138.2 million; Market cap: $8.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.1%; TSINetwork Rating: Average; www.timhortons.com) operates 3,588 coffee-and-donut stores in Canada, 859 in the U.S. and 38 in the Persian Gulf. Franchisees operate 99.6% of these outlets.

The company’s sales jumped 33.0%, from $1.7 billion in 2009 to $2.3 billion in 2013. That’s largely because it opened 573 new locations in Canada (up 19.0%) and 296 in the U.S. (up 52.6%). New menu items, like soups and panini sandwiches, also spurred sales.


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LOBLAW COMPANIES LTD. $46 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 282.4 million; Market cap: $13.0 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.loblaw.ca) continues to expand its Joe Fresh business, which makes casual clothing and accessories. Loblaw mainly sells these goods in over 300 of its supermarkets and through 22 stand-alone stores in the U.S. and Canada.

The company plans to take advantage of the brand’s popularity by opening 140 more Joe Fresh stores in 23 countries outside of North America in the next four years. Loblaw will team up with local partners to build and operate these stores, which limits the risk of expanding in unfamiliar markets.

Loblaw is a buy....

CANADIAN PACIFIC RAILWAY LTD. $174 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 175.7 million; Market cap: $30.6 billion; Price-to-sales ratio: 5.0; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.cpr.ca) has started charging oil producers a special surcharge for each older DOT-111 tanker car they use on its rail network.

CP hopes the charge will encourage these customers to upgrade to models with thicker hulls. That would make it less likely that oil will spill and catch fire in the event of a crash.

The company is also considering selling $2 billion worth of surplus real estate. These funds would help CP pay for its plan to buy back 3% of its shares over the next year.
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ANDREW PELLER LTD. $14 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.3 million; Market cap: $200.2 million; Price-to-sales ratio: 0.7; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.andrewpeller.com) reported that its sales rose 2.6% in its fiscal 2014 third quarter, which ended December 31, 2013, to $81.9 million from $79.8 million a year earlier. That’s mainly due to strong demand for the company’s premium wines during the Christmas shopping season.

Earnings fell 9.2%, to $6.0 million, or $0.43 a share. A year earlier, Peller earned $6.6 million, or $0.47 a share. The company is paying more for wine and juice on international markets. The costs of a restructuring plan, which includes outsourcing distribution functions and cutting marketing expenses, also hurt its profits. If you exclude all unusual items, earnings fell 4.4%.

Andrew Peller is a buy....

SAPUTO INC. $56 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 194.8 million; Market cap: $10.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.7%; TSINetwork Rating: Average; www.saputo.com) now owns 87.92% of Warrnambool Cheese and Butter Factory, an Australian producer of milk, cheese, butter and other dairy products. Saputo recently launched a takeover offer for 100% of this company, but Japanese beverage maker Kirin Holdings decided to hang on to its 10% stake.

Meanwhile, Warrnambool reported that its earnings jumped 102.0% in the first half of its current fiscal year from the same period a year earlier. That’s mainly because China is importing more dairy products to meet rising domestic demand.

Saputo trades at a somewhat high 18.8 times the $2.98 a share it will probably earn in the year ending March 31, 2014.
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AGRIUM INC. $105 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 143.7 million; Market cap: $15.1 billion; Price-to-sales ratio: 0.9; Dividend yield 3.2%; TSINetwork Rating: Average; www.agrium.com) plans to expand its nitrogen fertilizer plant in Borger, Texas.

Besides increasing fertilizer production, these upgrades will let Agrium make diesel exhaust fluid, which helps cut harmful emissions from diesel-powered vehicles.

The company will spend $720 million U.S. on this project, which it expects to complete in the second half of 2015.
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MANITOBA TELECOM SERVICES INC. $30 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 77.1 million; Market cap: $2.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.7%; TSINetwork Rating: Average; www.mts.ca) get 60% of its revenue from its 501,388 wireless, 486,833 telephone, 208,331 highspeed Internet and 109,085 TV customers in Manitoba. The remaining 40% comes from Allstream, which sells integrated telephone, Internet and other communication services to businesses across Canada.

The company paid $8.8 million for new spectrum in Manitoba. To put that in context, it lost $84.4 million, or $1.24 a share, in 2013. However, that loss was mainly due to a $130.4-million writedown of Allstream after the federal government blocked the sale of this business. Excluding all unusual items, Manitoba Telecom earned $1.69 a share. In 2012, it earned $144.5 million, or $2.17 a share.

Revenue fell 4.1% in 2013, to $1.6 billion from $1.7 billion. That’s mainly because declining demand for local and long-distance service cut Allstream’s revenue by 11.2%.
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TELUS CORP. $39 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 623.4 million; Market cap: $24.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.telus.com) gets 54% of its revenue from its 7.8 million wireless subscribers across Canada. It also has 3.3 million phone customers, 1.4 million highspeed Internet users and 815,000 TV subscribers.

The company spent $1.14 billion on new spectrum in the recent auction. That will let it expand its high-speed wireless network to reach 97% of Canada’s population, up from 80% now.

Meanwhile, strong demand for wireless and high-speed Internet continues to offset weaker revenue from its land line business. Telus earned $1.4 billion in 2013, up 13.4% from $1.2 billion in 2012. Due to fewer shares outstanding, earnings per share gained 15.5%, to $2.16 from $1.87. Revenue rose 4.4%, to $11.4 billion from $10.9 billion.
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HOME CAPITAL GROUP INC. $44 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 69.5 million; Market cap; $3.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www. homecapital.com) gets around 90% of its revenue by making residential mortgage loans to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. Its clients include recent immigrants with limited credit histories, and self-employed people.

The remaining 10% of Home Capital’s revenue mainly comes from credit cards and other loans to consumers and businesses.

Low interest rates continue to fuel loan demand. As a result, Home Capital’s revenue rose 7.0% in 2013, to $949.5 million from $887.7 million in 2012. Earnings gained 14.8%, to $257.7 million, or $3.68 a share, from $224.6 million, or $3.23. (All per-share amounts adjusted for a 2-for-1 stock split in March 2014.)

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ENCANA CORP. $22 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.9 million; Market cap: $16.3 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.4%; TSINetwork Rating: Average; www.encana.com) has decided not to sell its Deep Panuke offshore natural gas platform near Nova Scotia. This project reached full production of 300 million cubic feet a day in late 2013, which is equal to 11% of Encana’s total output.

Unusually cold winter weather has surred higher natural gas usage, and pushed up prices. That helps improve Deep Panuke’s profitability.

Encana is a buy.

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LINAMAR CORP. $50 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.8 million; Market cap: $3.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 0.8%; TSINetwork Rating: Extra Risk; www.linamar.com) continues to benefit from strong car sales, which have increased demand for its engines and transmissions. At the same time, rising construction activity has spurred sales of its self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name.

In 2013, the company earned a record $3.34 a share, up 49.1% from $2.24 in 2012. Sales rose 11.6%, to a record $3.6 billion from $3.2 billion.

The company also raised its quarterly dividend by 25.0%, from $0.08 a share to $0.10. The stock has nearly doubled in the past year, which is why the new annual rate of $0.40 yields just 0.8%. However, the stock is still attractive at 13.1 times Linamar’s likely 2014 earnings of $3.83 a share.
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NORDION INC. $12 (Toronto symbol NDN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 61.9 million; Market cap: $742.8 million; Price-to-sales ratio: 2.7; Dividend suspended in September 2012; TSINetwork Rating: Extra Risk; www.nordion.com) sells isotopes for cancer detection and research. It also makes products that sterilize food and surgical tools.

In its fiscal 2014 first quarter, which ended January 31, 2014, Nordion’s earnings jumped to $36.5 million, or $0.59 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, it earned $2.9 million, or $0.05 a share. The gain was partly due to positive exchange rates, which added $0.31 to the latest per-share earnings.

These figures exclude unusual items, such as costs related to the company’s strategic review. As part of this process, Nordion sold its Targeted Therapies division for $190 million in July 2013. This business makes TheraSphere, a process for treating liver cancer using millions of microscopic glass beads containing radioactive materials.
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BLACKBERRY LTD. $10 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 526.0 million; Market cap: $5.3 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) has jumped about 50% in the past three months, thanks to its new strategic plan.

In response to weak sales of its new BlackBerry 10 smartphones, the company is cutting 40% of its workforce and selling most of its Canadian real estate, mainly buildings near its Waterloo, Ontario, headquarters. It will lease back some of these properties after the sale.

As well, BlackBerry has signed a new five-year deal with Taiwan-based electronics maker Foxconn. Under this agreement, BlackBerry and Foxconn will jointly develop new smartphones, particularly for fast-growing markets like Indonesia. Foxconn will also assume responsibility for making these phones, which should help BlackBerry better manage its inventories and avoid costly writedowns of unsold phones.
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TRANSCONTINENTAL INC. $15 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.0 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.3%; TSINetwork Rating: Average; www. tctranscontinental.com) aims to cut its reliance on cyclical print advertising with a new deal to buy Missouri-based Capri Packaging, which makes plastic packaging for food. The company will pay $133 million U.S. when the deal closes later this year.

Capri’s two plants generate $72 million U.S. of annual revenue. Transcontinental feels its commercial printing expertise will help it make Capri more efficient.

Acquisitions always expose the buyer to hidden risks. However, Transcontinental has signed a 10-year deal to supply packaging to dairy producer Schreiber Foods, Capri’s parent company. Schreiber accounts for 75% of Capri’s revenue, so this acquisition is safer than it looks.
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FINNING INTERNATIONAL INC. $31 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.1 million; Market cap: $5.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.finning.com) is the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). It also sells equipment made by other firms.

The company sells these products to customers in the mining, forest products and construction industries in Western Canada (50% of revenue, 47% of earnings), South America (37%, 45%) and the U.K. (13%, 8%).

Finning’s revenue rose 50.8%, from $4.5 billion in 2009 to $6.7 billion in 2013. That’s largely because prices for commodi- ties, like oil and coal, rebounded strongly after the recession, spurring heavy equipment demand.
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on buying stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

DOREL INDUSTRIES (Toronto symbol DII.B; www.dorel.com) makes a range of items, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational goods, mainly bicycles....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “While new financial products flooding the market may offer some benefits, it pays to remember that the incentives are heavily weighted in favour of the seller, not the buyer.”...